Gold Recovers Some Losses As Weak US Data Spur Rate-Cut Bets

Gold retraced some of the heavy losses it incurred earlier this week, after bond yields sank on weak US economic data that raised bets on further Federal Reserve interest-rate cuts.

Bullion edged higher to trade near $3,245 an ounce, following a 2% gain on Thursday that was spurred by a report showing US producer prices unexpectedly declined by the most in five years, while separate data showed retail sales barely rose.

Treasury yields sank on those signs of ebbing economic activity and dimming inflation, which raised expectations for monetary easing. Lower borrowing costs and yields tend to benefit non-interest bearing gold.

The precious metal remains on track for a weekly decline of more than 2% and is around $250 below its all-time peak set last month. It’s lost some haven support as ebbing tensions between the US and China stoked risk-on sentiment this week. Despite that, bullion is up by more than a fifth this year, fueled by a rebound in demand for bullion-backed ETF products, strong central bank buying and speculative Chinese demand.

Spot gold rose 0.2% to $3,244.88 an ounce as of 7:21 a.m. in Singapore. The Bloomberg Dollar Spot Index was steady. Silver and palladium were little changed, while platinum edged higher.

In prepared remarks on Thursday, Fed Governor Michael Barr said the US economy is on solid ground, but warned tariff-related supply-chain disruptions could lead to lower growth and higher inflation.